Hannover Re expects reduced price pressure on property catastrophe reinsurance following the first-quarter Los Angeles wildfires but does not anticipate global price increases as a result.
Sven Althoff (pictured above), head of property/casualty reinsurance, said during a conference call that the wildfires would be an earnings event for the industry.
However, he noted that upcoming renewal rounds this year are unlikely to shift significantly from their current high levels. While property catastrophe business unaffected by losses may still see price reductions, the wildfires could slow the pace of those decreases, he said.
The reinsurer previously estimated that wildfire losses in Los Angeles would exceed its first-quarter catastrophe budget, projecting losses of up to US$725.4 million. That estimate was based on internal modeling and scenario analysis, assuming an industry loss between $30 billion and $40 billion.
If those projections hold, Hannover Re could see a net loss ranging from €500 million to €700 million (US$760 million), according to chief executive officer Jean-Jacques Henchoz.
Althoff said the company is maintaining its estimate for now but expects to have more precise figures when first-quarter results are released in May.
Henchoz said during the earnings call that the reinsurer is not revising its earnings forecast for 2025 despite the wildfire losses.
The reinsurer confirmed a 28% increase in group net income for 2024, reaching €2.3 billion and meeting the higher guidance set in autumn 2024. Hannover Re’s return on equity (ROE) rose to 21.2%, exceeding its strategic target. Reinsurance revenue also grew by 7.9% to €26.4 billion for the year.
While Hannover Re does not anticipate global price increases, its German subsidiary E+S Rückversicherung AG (E+S Rück) expected further price increases and improved terms in the property and casualty reinsurance market ahead of the now completed 1/1 2025 renewals.
The company cited the impact of numerous natural catastrophes in recent years, which have caused significant losses in Germany. Floods in 2024 followed previous severe weather events involving hail, heavy rain, flash floods, and winter storms.
Additionally, motor insurance remains in deficit due to structural issues, and there has been an increase in loss notifications for prior-year claims.
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